20 stocks that should see boost as investors seek stability: S&P\’s Stovall

Low-quality stocks on the S&P 500 Index
have been outperforming higher-quality ones over the last 12 months. But as the market enters a period of seasonal instability, whether it be the sell in April/May crowd or those concerned about the lead up to the midterm elections, Sam Stovall, chief equity strategist at S&P Capital IQ believes certain high-quality stocks are likely to benefit from a rotation back into quality.

Using S&P Capital IQ\’s stock grading system that measures earnings and dividend growth consistency, Stovall found higher-beta stocks that received a B or C grade had total returns of 21.7% over the past 12 months and 12.5% over the past 13 weeks. Stocks with a grade of A- to A+ showed 12-month returns of 16.9% and 13-week returns of 7.9%, while stocks graded B+ had a 12-month return of 19.5% and a 13-week return of 11.4%.

Stovall writes:

With the S&P 500 now in the early stages of its seasonally vulnerable period, investors will likely start thinking more about stability of price and quality of earnings. And of course, they don’t want to over-pay for any investment they consider making.

This copy is for your personal, non-commercial use only. Distribution and use of
this material are governed by our
Subscriber Agreement
and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones
Reprints at 1-800-843-0008 or visit